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mercial invoice should identify the prime contract and/or upper-tier subcontract to which it relates.
(c) The Government auditor cognizant of the prime contract or upper-tier subcontract under which the cost-reimbursement type subcontract was issued is primarily responsible for determining the need for audit of such subcontract. The following criteria should be considered when determining whether the prime contractor or the Government should perform the audit of the subcontract:
(1) Whether the subcontractor objects to an accounting review of his records by the prime contractor for valid business reasons;
(2) Whether the Government auditor is currently performing audit work at the subcontractor's plant or can do so more economically or efficiently;
(3) Whether the audit by the Government auditor is necessary for consistent audit treatment and orderly administration; and
(4) Whether the prime contractor has a substantial or controlling financial interest in the subcontractor.
§ 24-51.410 Suspension and disapproval.
(a) The determination as to the suspension or disapproval of an item of cost is the responsibility of the contracting officer. Suspended costs are those costs which appear questionable but upon which a final determination cannot be made based upon available information; suspended costs also include amounts which the contractor claims but which are required to be withheld pursuant to the provisions of the contract. Disapproved costs are those costs which have been determined by the contracting officer to be unallowable under the provisions of the contract.
(b) Auditors, during the course of contract audit, may recommend to the contracting officer the suspension or disapproval of items of cost included in a contractor's voucher.
and distribute the original and two copies to the contractor, two copies (one copy each attached to SF 1034 and SF 1034A or other voucher) to the financial office, one copy to the auditor, and one copy for his own file. The original and the copies for the contractor and one copy to the financial office will be signed by the contracting officer. Other copies may bear typed or stamped signatures. Amounts deducted from the contractor's claim by the contracting officer will be shown in the "Difference" block on the face of the voucher, using one line for the amount deducted and one line for the new approved amount. In all cases, the contracting officer must be satisfied that the explanation and reasoning given for suspension or disapproval are complete and accurate.
(c) Upon receipt of a recommendation of suspension or disapproval from the auditor, the contracting officer will review pertinent data and consult with appropriate personnel to determine what further action should be taken as to the items of cost in question.
(1) Where the contracting officer is in agreement with the recommendation of the auditor, he will assign a Notice Number to the written notice of suspension
(2) Where the contracting officer does not agree with the recommendation of the auditor, he shall state his reasons therefor and shall furnish to the auditor a copy of his statement. Subsequent thereto, he should consult with the auditor and other Government personnel, as may be necessary, and the contractor, if appropriate, to dispose of any remaining items in question.
(d) Where a notice of suspension or disapproval is issued by the contracting officer, the contractor shall be given sufficient time to present additional information or justification in support of the items of cost suspended or disapproved. Normally, this period should not exceed 30 days. The contracting officer shall inform the contractor that issuance of the notice is not a decision by the contracting officer with respect to the Disputes clause of the contract. However, the contractor shall be advised that failure to reply within the time limit set by the contracting officer, or any approved extension thereof, may result in the contracting officer issuing a final decision on the items of cost suspended or disapproved, pursuant to the Disputes clause of the contract, except for those items of cost suspended in accordance with § 2451.406 of this chapter.
(e) If, after receipt of the notice, the contractor requests, in writing, an extension of time in which to present additional information or justification in support of the items of cost suspended or disapproved, the contracting officer may, if he decides that the facts justify such action, grant such additional time to the contractor, by separate letter. Where the contractor fails to submit additional data
within the time specified, and fails to obtain an extension of time for submitting such data, the contracting officer may receive and act upon any data received from the contractor at any time prior to final payment under the contract, if he decides that the circumstances warrant such action.
(f) Upon receipt of the contractor's reply, the contracting officer will consult with the Government auditor, and such other personnel as may be appropriate, concerning the additional information and justification submitted.
(1) If the contracting officer decides to withdraw the notice of suspension or disapproval, action shall be taken to reinstate the items of cost involved, and the contractor's voucher may be processed for payment.
(2) For those items of cost which the contracting officer determines after reexamination are unallowable and the contractor has continued to claim, the contracting officer shall prepare and process a final decision pursuant to the Disputes clause. Resolution of questions regarding suspended costs also may be effected by an appropriate statement from the contractor evidencing his acceptance of the suspension.
(3) When sufficient information is not available to change the status of items of cost that have been suspended, such items shall be held in a suspended status until an appropriate decision can be made. During the period of the contract, mere passage of time does not change the basic reimbursable or nonreimbursable nature of the item of cost in question. Accordingly, costs suspended will not be converted to costs disapproved when there is no reason for the conversion other than the failure of the contractor to resubmit costs. However, a final decision concerning the status of all suspended items shall be made prior to or at the time the completion voucher under the contract is processed for payment.
succeeding vouchers (expected to be received within a reasonable length of time). The deductions on any voucher shall not exceed the amount thereof to avoid processing of a voucher in a credit amount. Notwithstanding that a voucher may be in a zero amount, it will be processed to the financial office via the usual channels to provide a record of the voucher action.
(2) Obtain from the contractor his check for the amount of the credit, payable to the Department of Housing and Urban Development.
(3) When the credit cannot be recovered by deductions from the current and succeeding vouchers and the contractor declines to make refund thereof, the contracting officer shall accomplish or cause to be accomplished the collection by a setoff deducted from voucher(s) submitted by the contractor under any of his other contracts with the contracting officer concerned, unless otherwise precluded, such as by the no-setoff provisions of the Assignment of Claims clause. Where the contracting officer has no other contracts under which a setoff may be accomplished, he shall refer the matter to the financial office for collection by setoff or any other method.
(b) When the collection is effected by setoff, there will be shown on the voucher from which the deduction is made a notation identifying the contract and appropriation to which the credit is applicable and identifying the related notice. § 24-51.412 Exception.
To the extent that any of the procedures contained in this subpart are inconsistent with the procedures for processing payments used by the Federal Housing Administration, the latter procedures may continue to be used.
Subpart 24-51.5-Closing Completed Contracts
Scope of subpart.
This subpart establishes policy and procedures governing the closing of completed contracts and is applicable to all contracts, grant contracts, and interagency agreements.
§ 24-51.501 General.
The procedures for closing completed contracts are a primary tool of contract management and contract administration. Contract closing reviews should be extensive and should ensure that the file
is completely documented. The comprehensive closing review serves the following purposes:
(a) Facilitates orderly segregation and disposition of records, and ensures efficient use of filing equipment and space;
(b) Identifies all uncompleted actions; (c) Ensures that all contractual obligations have been fulfilled, that the interests of the Government have been protected; and, that sound business practices have been followed.
A completed contract is one which is both physically and administratively complete and in which all aspects of performance by the contractor have been either accomplished or formally waived. A contract is physically complete only after all articles and services called for under the contract have been delivered to and formally accepted by the Government, including those articles and services for which no specific compensation may have been stipulated. A contract is administratively complete when all payments have been made and all administrative actions accomplished. § 24-51.503 Closing checklist.
(a) The closing review is for the purpose of verifying that all actions necessary to complete the contract have been consummated and fully documented. When the review indicates that the contract may be incomplete in any respect, the circumstances shall be investigated to determine whether some necessary action has been omitted. Where prior actions have been taken but not documented, or are incompletely documented, a closing memorandum, which will summarize all prior actions, will be prepared and will reflect the proper documentation. When a contractual matter remains in an open status, completion action shall be initiated to the extent feasible.
(b) The following list represents the more significant items of contract closing which are to be treated in the closing memorandum. The closing memorandum shall be retained in the contract file. The order in which this list is presented is not significant.
(1) Determine the status of deliveries and billings and prepare a reconciliation of differences in billings and payments.
(2) Verify that all contract changes have been incorporated in the contract by modification.
(3) Ensure that adequate documentation exists to evidence receipt and formal acceptance of all contract items.
(4) Verify the proper disposition of Government furnished property.
(5) Verify that price revision, when called for, has been accomplished and examine the adequacy of supporting data. (6) Verify that consent to subcontracts has been obtained in all instances required by the contract.
(7) Ensure that advance or progress payments have been liquidated and that action has been initiated to recover any overpayments.
(8) Ensure that in all instances where other Government agencies are involved that closing actions are coordinated.
(9) Ensure that the contractor has been alerted to the contract requirement for the maintenance and retention of books and records.
(10) Confirm that appropriate and fully documented action was taken with respect to violations of standard contract clauses based on acts of Congress or Executive orders concerning labor laws, equal employment opportunity, contingent fees, domestic articles, officials not to benefit, etc., or in lieu thereof that the file contains a memorandum that cognizant administrative personnel know of no such violation.
(11) Ascertain whether any questions arose regarding exemptions from Federal or State tax laws and ensure that such questions have been properly resolved.
(12) Examine the contract and contract files to ascertain the possible existence of pending disputes, contingent liabilities, or circumstances out of which future claims or litigation might arise, potential credits, or refunds or other future recoveries. Ensure that adequate reserves have been set aside to provide for contingent liabilities. Maintain suspense and follow up on any matters which remain unresolved. Coordinate with legal and audit personnel where appropriate.
(13) Determine that all administrative reviews and approvals have been accomplished and documented.
(14) Review all notices of cost suspension or disallowance to determine that the issues have been resolved.
(15) Determine that all reports required by clauses relating to patents,
(a) In the absence of full performance and compliance with all contract terms, as disclosed by the closing review, the contract file shall be examined to ensure that the documentation contained therein adequately reflects that proper action has been taken with respect to omissions, waivers, deviations, etc.
inventions, royalties, copyrights, and publication have been received.
(16) Determine that all required data have been delivered.
(17) Ensure that all investigations and reports to the General Accounting Office have been completed and documented.
(18) Confirm that assignment and subrogation have been accomplished in favor of the Government in connection with all contractor's rights and claims, other than those against the Government, pursuant to contract terms.
(19) Determine that final audit of cost reimbursement contracts has been completed and that a copy of the audit report is included in the file.
(20) Establish that the final voucher for cost reimbursement contracts is supported by the necessary cumulative claim and reconciliation, assignment of refunds, rebates, credits and other amounts, and final release of claims by the contractor.
(21) Ensure that an evaluation of the contractor's performance has been made and that a copy is retained in the contract file.
(b) Under appropriate circumstances, a contract may be treated as complete (when complete in all other respects) notwithstanding the existence of one or more unresolved contingencies. The determination that such contract will be closed will be made by the contracting officer. The contract file shall be fully documented by memoranda detailing the circumstances connected with the open item(s). No closing action shall be taken when:
(1) A matter awaiting disposition may be anticipated to have a significant impact on performance or consideration;
(2) Complete disposition may call for substantive action on the part of the Government.
SOURCE: The provisions of this Subpart 39-1.1 appear at 28 F.R. 10879, Oct. 10, 1963, unless otherwise noted.
§ 39-1.101 Purpose.
This subpart establishes a system of Post Office Department Procurement Regulations (PODPR) for the codification and publication of policies and procedures for procurement by the Post Office Department (POD) which is subject to the Federal Property and Administrative Services Act of 1949, as amended.
§ 39-1.102 Authority.
PODPR are issued in compliance with the Federal Procurement Regulations System prescribed by the Administrator of General Services under the Federal Property and Administrative Services Act of 1949, as amended.
§ 39-1.103 Relation to Federal Procurement Regulations System.
The Federal Procurement Regulations System is designed to bring together, under Title 41, Subtitle A, of the Code of Federal Regulations, the procurement regulations applicable to all civilian agencies of the Government. Federal Procurement Regulations (FPR) are Chapter 1. Chapter 39 is assigned for the procurement regulations of the POD. Parts 1 through 49 of PODPR (Chapter 39) will be used to implement or supplement the policies and procedures included in FPR. Material issued in the